Trying to combine some neat thoughts from my summer and some Â lessons from my MBA…I was thinking how to think about the summer internship in terms of real options.
In one sense, it’s an option from the company, they “rent” you for a summer, with an option to retain you (if they like you) after you graduate.
Another way, it’s an option for the summer intern as well. The intern gets to “test” out the company, and if the intern likes it then they can choose to return upon graduation.
The options on both sides are contingent assuming the other party would welcome the option.
Hence I would model the scenario with the below graph as a Knockout Option:
The X-axis models the talent level of the intern.
The Y-axis is how much utility the company can get out of the intern.
Zone I: Represents the area, where the intern’s skillset does not match with the company’s needs. Often, the intern would like to be at the company, while the company would rather have someone else.
At point A, there is a transition, where the intern meets the company’s minimum utility needs and can now be a good asset to the firm.
Zone II: Represents the area where both the intern’s skillset matches the company’s needs. This is often a happy spot for both the intern and the company.
At point B, there is another transition. The intern is quite good, and the company can get a lot of utility out of the intern, but the intern may be “too good” for this company. Which bring us to point C, where the intern would rather pursue another option, and thus provide zero value to this current company.
Zone III: Represents the area where the company would love to exercise the option on the intern, as they would be very useful to the company, but where the intern may not exercise his/her option, as they feel they can learn/gain more, get more satisfaction/challenge at a different company/option.
Of course where point A, B, and C is and how the curves looks is different for every person and every company. But the main ideas are the same.
And really, more than just the internship, this may broadly describe current jobs/positions. As one grows in their career/position, they climb up the curve in Area II, eventually reaching a point (B) where they need to go to another position or company…even though it’s more useful to the firm for that person to continue there.
I wonder where I see myself right now?……